Senegal has launched a $5 billion bond restructuring effort to avoid becoming the first West African nation to default since Ethiopia's 2023 debt crisis. The initiative follows the government's discovery of billions in hidden debt two years ago, which raised concerns among emerging-market bond investors about the country's ability to meet its obligations.

The restructuring, which began on Tuesday, represents a critical test of Senegal's debt management capabilities in the face of deteriorating fiscal conditions and regional economic pressures.

Investors have been closely monitoring whether Senegal can navigate its debt challenges without following Ethiopia's path, which defaulted on its debts in 2023, marking the first such default in sub-Saharan Africa in recent years.